Keefe recommends pair trade of long Voya, short Principal Financial

Keefe Bruyette analyst Ryan Krueger recommends a pair trade of overweight Voya Financial (VOYA), underweight Principal Financial Group (PFG). The two companies have a similar business mix, similar fundamental outlook, and similar risks, but Principal trades at a "significant valuation premium," Krueger tells investors in a research note. Voya shares have lagged as investors grapple with the Benefitfocus deal, pause in buybacks, and management succession, says the analyst. "Ultimately we could justify a modest valuation premium for PFG, but the current magnitude is extreme and we expect to narrow over time," Krueger writes.